Bressler Risk Blog

“Musk, KKR Lawsuits Traded by Judges Over Conflict Concerns” —

• “A Delaware judge Monday reassigned litigation over a $720 million payout to KKR & Co. insiders, completing a swap with the judge who recently stepped away from a batch of cases targeting Elon Musk.”
• “Vice Chancellor Bonnie W. David responded to conflict-of-interest concerns by handing the KKR case to Chancellor Kathaleen St. J. McCormick, who recently sent the Musk lawsuits to David after he raised bias allegations. David swiftly dismissed the Musk suits from Delaware’s Chancery Court, effectively sending them to Tesla Inc.’s new home, Texas, where corporate cases are harder for shareholders to bring and win.”
• “Musk’s judicial recusal gambit immediately sparked fears that other aggrieved businesses or billionaires might follow his lead, a possibility David addressed head on in Monday’s ruling.”
• “‘As officers of the court, Delaware lawyers owe a duty not to seek judicial reassignment to obtain a perceived litigation advantage,’ the judge wrote. ‘I am hopeful that this motion is an outlier.'”
• “The two case reassignments were parallel but far from symmetrical. The world’s richest person spent years slamming McCormick and trying to incite a mass ‘DExit’ from the state after she voided his $56 billion compensation. Lawmakers spooked by the attacks scrambled to lower the guardrails around powerful founders, and Delaware’s top court later reinstated the record pay plan.”
• “McCormick finally stepped away from Musk’s remaining cases after he scored a hit with his allegation that she’d endorsed a LinkedIn post taunting him. The judge—who has said she engaged with the social media post accidentally if at all—presided over an ad hoc reassignment procedure using Scrabble tiles.”
• “The decision to let go of the KKR litigation involved far less drama, but it was still unusual in a state where bids for judicial recusal are exceedingly rare. The motion for disqualification by the pension fund suing KKR concerned David’s ties to her former firm, Skadden, Arps, Slate, Meagher & Flom LLP, which is representing the KKR conflicts committee that signed off on the payout and restructuring.”
• “Although the investment firm and its co-founders fought the request—referring to it in a May 1 court filing as an act of ‘gamesmanship’ that failed to raise any evidence of ‘genuine bias’—David granted it with little fanfare, citing Delaware’s judicial ethics code. Her initial order said the case would be randomly reassigned, but a subsequent docket entry indicated it landed with McCormick.”
• “The Steamfitters Local 449 Pension Fund is represented by Friedlander & Gorris PA, Robbins Geller Rudman & Dowd LLP, and Shobe & Shobe LLP. KKR, its founders, and other board members are represented by Richards, Layton & Finger PA and Simpson Thacher & Bartlett LLP.”
• The case is Steamfitters Local 449 Pension Fund v. Kravis, Del. Ch., No. 2024-0808, 5/4/26.

“Judge declares ‘conflict of interest’ in defense teams ahead of Amber Spradlin murder trial” —

• “The judge presiding over the Amber Spradlin case has asked two of the attorneys involved in the defense to clear up a conflict of interest concern ahead of the upcoming murder trial.”
• “On Wednesday, Judge Eddy Coleman filed an order, addressing Randy O’Neal, one of the attorneys for MK McKinney, and Whitney O’Neal, the attorney for Josh Mullins. They are both attorneys for the same law firm, O’Neal Law Office, and have represented their respective clients since the early days of the case. Since the couple got married in 2025, their relationship has never been a public topic of discussion as a conflict of interest in the courtroom.”
• “However, after Mullins’ attorney filed a motion in support of a continuance in the trial, while McKinney’s team has maintained its demands for a speedy trial, Judge Coleman is asking for clarification about the possible conflict to the defendants moving forward.”
• “‘Upon receipt of any information reasonably suggesting that what is best for one client may not be best for another, counsel shall explain its significance to the defendant and disclose it to the court, and shall withdraw as counsel for one client or the other unless (a)each such client who is a defendant in the proceeding executes a written waiver setting forth the circumstances and reiterating the client’s desire for continued representation by, the same counsel and(b) such waiver is entered in the record of the proceeding,’ said the order.”
• “Coleman said the fact that the O’Neals represent the same firm and opposite opinions in the case is grounds for them to be removed from the case, unless their clients object.”
• “‘Mullins has taken the position that a continuance would be best for him while Defendant Michael K. McKinney, III has repeatedly objected to continuance and reiterated his demand for speedy trial,’ said the order. ‘Thus, as members of the same law firm, Randall O’Neal and Whitney O’Neal represent two co-defendants with a clear conflict of interest requiring the counsel to explain the significance to the defendants and withdraw their representation unless an executed waiver from each defendant is filed with the Court.'”
• “The order is expected to be discussed Monday at the next pretrial conference, during which several other motions will also be addressed.”

David Kluft asks: “Can I sue my own client if I have an advanced waiver?” —

• “The OR bar opined on the following scenario: a law firm wanted to represent Client X in a dispute with its own Client Y. Client Y had separate counsel for the dispute, and the firm’s representation of client Y was completely unrelated to the subject matter of the dispute. Both Client X and Client Y had signed ‘advanced conflict waivers.'”
• “The OR bar gave a qualified yes to this arrangement, so long as the requirements of Rule 1.7(b) are met and the waivers are enforceable because they are specific enough to have identified in advance this type of conflict.”
• “(Ed. Note: The opinion is correct as far as it goes but punts on what happens next, e.g., how do you cross your own client on the stand when you have confidential information that may go to their credibility and that you can’t use? Good luck trying to convince a judge it’s all cool because the client you are now tearing apart signed a boiler plate form letter 10 years ago. Not a very useful opinion).”
• Opinion: here.

“How Six Big Law Firms Lost Confidential M&A Data to a Global Insider Trading Scheme” —

• “Over the course of a decade, three Big Law attorneys accessed confidential M&A data from six Am Law 100 firms on nearly 30 transactions for the purpose of selling the information to friends and family members who could trade on it, say federal prosecutors and SEC officials in court papers unsealed Wednesday.”
• “The documents outline the sheer scope of a plan that involved six Big Law firms. In some cases, the attorneys were able to access material non-public information for matters on which they weren’t staffed.”
• “Together, the three ex-Big Law attorneys allegedly stole non-public information from their former employers, including Wachtell Lipton Rosen & Katz, Latham & Watkins, Goodwin Procter, Sidley Austin, Weil Gotshal & Manges, and Willkie Farr & Gallagher.”
  • “The lawyers include Nicolo Nourafchan, whom the DOJ accused of co-leading the scheme alongside Robert Yadgarov. Nourafchan worked as a corporate associate at Cleary Gottlieb Steen & Hamilton after graduating from Yale Law School in 2011, before moving to Sidley Austin in 2013.”
  • “Nourafchan left Sidley for a year-long stint as in-house counsel at a film production company in 2018 and then arrived at Latham & Watkins in 2019. Nourafchan was terminated by Latham in August 2020, according to an unsealed indictment, and went to work for Goodwin Procter in 2021. Goodwin terminated Nourafchan in September 2023, per the indictment.”
  • “Gabriel Gershowitz graduated from Columbia Law School and in 2010, joined Weil, Gotshal & Manges, where he worked until his 2019 move to DLA Piper. Gershowitz then joined Willkie Farr & Gallagher in 2021 and worked there until 2025, when he became a cooperating witness for the U.S. Attorney’s Office for the District of Massachusetts.”
  • “A third lawyer, addressed as ‘co-conspirator 2,’ worked at Wachtell Lipton Rosen & Katz from 2013 to 2022, at which point he joined an investment bank.”
• “Nourafchan was the most prolific thief of non-public information, the DOJ and SEC documents indicate, having misappropriated confidential M&A data in 11 matters at Goodwin, five matters at Latham and two at Sidley.”
• “At Goodwin, Nourafchan was able to view confidential information in nine matters on which he was not staffed by accessing the firm’s ‘computer servers,’ the SEC complaint stated.”
• “He was similarly not staffed on four of the five matters in which he accessed non-public information while at Latham, but was still able to access this information, including ‘a draft merger agreement, diligence review tracker, timeline, and signing checklist,’ per the SEC.”
• “The DOJ and SEC documents provided incomplete or nonexistent information on whether Nourafchan, Gershowitz or co-conspirator 2 were staffed on matters in which they accessed and shared non-public information at the four other firms.”
• “In an email, a spokesperson for Wachtell said the second co-conspirator left the firm four years ago and noted that there are no allegations of wrongdoing against the firm. ‘Wachtell Lipton has cooperated fully with the U.S. Attorney’s office and will continue to do so,’ the spokesperson said.”
• “A Latham spokesperson referred Law.com to an earlier statement, in which the firm noted that Nourafchan had left the firm five years ago and said the alleged conduct would ‘reflect a serious violation of our robust policies and procedures.'”
• “Representatives of the four other firms did not immediately respond to questions about how their non-public information was accessed and how they would prevent misuse of confidential client data in the future.”
  “Gershowitz declined to comment through his attorney, Scott Morvillo. An attorney for Nourafchan, Eric Rosen, did not immediately
• “The ‘tipping scheme,’ as the SEC called it, included layers of middlemen who handed off material non-public information from the three corporate attorneys in order to avoid detection, although the DOJ indicated that some of the co-defendants traded on information they had been instructed not to trade on by other members of the scheme.”
• “The scheme targeted long positions on companies whose stocks were expected to rise in value after public deal announcements, which a network of traders were able to get ahead of, thanks to the deal lawyers’ insider information.”
• “The second co-conspirator accessed and shared non-public data for eight deals while at Wachtell, with the most recent deal being Occidental Petroleum’s 2019 acquisition of Anadarko Petroleum.”
• “While at Weil, Gershowitz also accessed and provided non-public information to Nourafchan on the Anadarko deal, in which Weil represented investment banks and Wachtell represented Anadarko. Gershowitz was staffed on the deal, the SEC stated in its complaint.”
• “Gershowitz also shared non-public information with Nourafchan and Yadgarov on a planned 2019 combination of a specialty packaging business owned by Ardagh Group with Exal Corporation, in which Weil advised a controlling Exal shareholder.”
• “Then, while at Willkie in 2024, Gershowitz was staffed on Sixth Street’s acquisition of global insurer Enstar Group Limited, in which Willkie represented Sixth Street. Gershowitz drafted a document titled ‘Project Elk-Reinsurance Diligence Call Agenda Items,’ in reference to the project’s codename, before sharing non-public information with Yadgarov in May 2024.”
• “Gershowitz also shared information on the deal with Nourafchan while the two were in Gershowitz’s apartment in July 2024. Co-defendant Joseph Suskind made $630,000 in illicit profit on the subsequent trade.”
• “The alleged perpetrators attempted to conceal their activities using codenames, with tips referred to as ‘airline flights’ and ‘learning,’ referring to the act of trading information.”
• “A total of 30 men were charged in Wednesday’s unsealed indictments, with charges including securities fraud, conspiracy to commit securities fraud, money laundering conspiracy and obstruction of justice, among others. The SEC’s complaint alleged violations of the Securities Exchange Act of 1934 against 21 men. Nourafchan and co-conspirator 2 were each charged and sued by the DOJ and SEC, respectively.”

See more details and government filings: “Thirty Individuals Charged in Global Insider Trading Scheme Netting Tens of Millions in Illicit Profits.“

“Data Center Referendum Committee loses attorney due to conflict, retains another firm” —

• “The committee challenging Frederick County’s new data center zone through a referendum had to obtain new counsel last week after its attorney discovered a conflict of interest.”
• “Paul Flynn of the Flynn & Clarke law firm in Frederick formally recused himself on April 24 from defending the Frederick County Data Center Referendum Committee in three legal challenges that are attempting to block the referendum from appearing on the general election ballot in November.”
• “Flynn told the committee in a written statement that he discovered on April 21 that he is currently representing ‘another arm of’ a parent company behind one of the petitioners that is challenging the referendum in Frederick County Circuit Court. “
• “He wrote to the referendum committee that he and Dan Loftus, counsel for the Frederick County Board of Elections, met with opposing counsel on a Zoom call on April 21. One of the opposing counsel, whom he was meeting for the first time, ‘announced that he represents what is apparently the parent company of the one that filed the petition,’ Flynn wrote. ‘I suspect he did that intentionally to make the connection for me.'”
  His statement did not indicate the law firm or the attorney who made the announcement.”
• “Flynn wrote that he is currently representing a branch of that parent company and that he has ‘represented that group of companies for many years in multiple other matters.'”
• “In a public statement regarding the issue on Friday, the referendum committee wrote that they received the news of Flynn’s recusal with ‘shock and dismay.'”
• ‘These events left us scrambling to find new representation,’ the committee’s statement reads. ‘The feeling of embarking on a major legal defense … suddenly without an attorney, is hard to describe.'”

“The NC elections board hired a lawyer who was also suing it” —

• “State elections director Sam Hayes hired one of North Carolina Republicans’ go-to lawyers to defend the state Board of Elections in a lawsuit this year, even though that lawyer was representing clients with active lawsuits against the board in four other cases in state and federal court. “
• “Phil Strach represents Republican legislators, the Republican National Committee and the state Republican party in redistricting and election cases.”
• “As Hayes sought to hire Strach, Strach asked Hayes to sign a waiver acknowledging that his firm was representing board adversaries in other cases.”
• “‘Your consent signifies a waiver of any and all conflicts on behalf of other Firm clients which may exist in present unrelated matters or could arise in future unrelated matters due to this representation,’ Strach’s January 30 letter said. ‘You agree to not use our representation in the New Engagement as a ground for seeking our disqualification in such matters,’ Strach’s letter said. “
• “In an email Friday, the board’s director of external affairs, Jason Tyson, said there aren’t many lawyers in the state ‘who know election law to the extent required to handle these cases. We knew Mr. Strach would provide us the representation needed for this case.'”
• “The state board in January denied requests to open early voting sites for the primary at UNC-Greensboro, NC A&T State University, and Western Carolina University. Hayes hired Strach to represent the state board as college Democrats’ groups and students sued. A federal judge declined to force the campuses to open early voting sites.”
• “Democrats on the state elections board said they did not know in advance about the waiver and sought Monday to try to keep another from being signed without their input.”
• “The state board agreed Monday to an Anson Board of Elections’ request for legal assistance in a dispute with the Anson County Board of Commissioners. The state Attorney General’s office advised the board to use someone other than state lawyers, state Board Secretary Stacy ‘Four’ Eggers IV, said. “
• “Board member Siobhan Millen, a Democrat, tried to add a stipulation that each board member would need to sign the conflict of interest waiver if the lawyer Hayes chooses is representing other clients in cases against the board”
• “‘I think that’s a personal right,’ she said. ‘No one else can waive that for me.'”
• “The board rejected that request along party lines. Eggers said lawyers representing board members do so in their official capacity, not as individuals.”
  “The board approved hiring a lawyer for the Anson elections board with a 4-1 vote, with Democrat Jeff Carmon opposed. In an interview after the meeting, Carmon said he didn’t think Strach should have represented the board at the same time he was suing it.”
• “‘We can sign that waiver, knowing there’s a conflict,’ Carmon said in an interview. ‘We’d like an opportunity to address that conflict rather than have it be arbitrarily waived.'”
• “The North Carolina Bar Association conflict of interest rule says that lawyers must have written consent if they are defending clients in one case while opposing them in a different case. Lawyers must also believe they ‘will be able to provide competent and diligent representation to each affected client.'”
• “In the four lawsuits Strach mentioned in his waiver letter, he was representing the Republican National Committee, the NC GOP, individual voters, or members of the Justice For All Party. “

“Conflict-of-interest lawsuit surrounds ‘financially distressed’ medical clinic” —

• “The attorney for a Waterloo medical clinic is being sued by other Iowa healthcare providers for alleged conflicts of interest in his legal work. The lawsuit centers on representatives and affiliates of Cedar Valley Medical Specialists, a multispecialty medical clinic located in Waterloo that, according to one of its lawyers, is currently in financial distress.”
• “Three of CVMS’ affiliates — Waterloo’s Digestive Health Center, a gastroenterological ambulatory surgery center; P & H, a company that functions as CVMS’ landlord, and Dr. Ravindra Mallavarapu, who has worked at CVMS since 2002 and is also the majority owner of both Digestive Health Center and P & H — filed suit last week against Michael D. Schwartz and the Schwartz Law Firm of Oakdale, Minnesota.”
• “Court records indicate Schwartz has represented CVMS for 25 years, and it’s that representation that’s at issue in the lawsuit, which was filed in U.S. District Court for the Northern District of Iowa.”
• “While significant portions of the lawsuit and related filings are either redacted from public view or sealed entirely by order of the court, the case appears to involve not only alleged conflicts of interest by Schwartz, but also financial issues at CVMS.”
• “Weinhardt then informed the court that his three clients are currently in the process ‘of separating themselves from CVMS, and it’s going to take some time for them to work their way out of that arrangement.'”
• “He said the plaintiffs and the defendants have agreed on the language for a temporary restraining order that, if approved by the court, would prevent Schwartz from representing Cedar Valley Medical Specialists as long as there are any pending legal disputes between the clinic and the plaintiffs.”
  “In addition, Weinhardt said, the proposed order would prevent Schwartz from representing the clinic in any actions against Farmers’ State Bank, which he described as one of CVMS’ creditors.”
• “Weinhardt said that last week the bank reached an agreement with the plaintiffs ‘about matters between them.’ Although he didn’t elaborate, he did say the interests of the plaintiffs and the bank ‘are now aligned … We believe, therefore, that for Mr. Schwartz and his law firm to represent CVMS against Farmers’ State Bank would result in them taking actions that are detrimental to our clients’ interests.'”
• “The lawsuit seeks a temporary restraining order, as well as preliminary and permanent injunctions, barring Schwartz and his firm from continuing to represent CVMS in any matters that include the plaintiffs as potential adversaries.”
• “The lawsuit alleges that until he was asked to resign on March 5, 2026, Schwartz was a member of Digestive Health Center’s management board, and had, in the past, represented the center, P & H and Mallavarapu as their attorney — even in matters related to their contracts with CVMS, another longtime Schwartz client.”
• “As one example of the alleged conflicts of interest that arose from these roles, the lawsuit claims that last year Digestive Health Center sought to decrease the fees it paid to CVMS for certain services.”
• “Schwartz allegedly advised Mallavarapu, head of the center, to write a letter to CVMS, and even provided instructions on the letter’s contents. Then, in his role as legal counsel for CVMS, Schwartz allegedly attended a CVMS board meeting during which members agreed to a reduction in the fees charged to Digestive Health Center.”
• “‘Mr. Schwartz represented both sides in those negotiations without obtaining conflict of interest waivers,’ the lawsuit claims. ‘After the plaintiffs [information redacted from public view], they repeatedly demanded that the defendants withdraw from representing CVMS… The defendants refused to withdraw. In mid-April 2026, the Defendants suddenly withdrew from representing CVMS altogether, only to, on April 27, 2026, reengage with CVMS.'”
• “Schwartz said little during Monday’s court hearing, except that ‘obviously, we would disagree with the allegations in the complaint. There has been no confidential information shared with us, and there has been no breach of duties, et cetera.'”
• “At the conclusion of Monday’s hearing, Chief Judge Williams indicated he will issue the agreed-upon temporary restraining order, but told all of the parties he had ‘grave concerns’ as to whether he could retain jurisdiction over the case given the fact that federal rules require that such a case involve $75,000 or more that is in controversy.”

“Appeals court again rejects bid to dismiss Graham Weston lawsuit against former attorney” —

• “An Austin appeals court has again rejected a San Antonio attorney’s attempt to dismiss a lawsuit by Rackspace Technology Inc. co-founder and downtown developer Graham Weston, reaffirming that claims the lawyer worked against him by representing his estranged wife in their divorce can proceed.”
• “In a revised opinion issued Thursday after rehearing, the 3rd Court of Appeals left its decision unchanged but sharpened its reasoning, saying the lawsuit against San Antonio attorney Jason Davis and his firm centers on alleged conflicts and failures to disclose them-not protected legal speech under the Texas Citizens Participation Act. Davis argued the lawsuit should be dismissed under the act, saying the claims stem from his communications and legal work in investigating and pursuing his client’s claims in the divorce.”
• “Weston countered that his lawsuit is based not on protected communications but on Davis’ alleged conduct, including failing to disclose a conflict while representing opposing interests.”
• “Because Weston’s claims focus on Davis’ alleged conduct rather than his courtroom filings or legal advocacy, the court said they don’t qualify for dismissal under the act, which protects free speech and legal petitioning from retaliatory lawsuits.”
• “The revised opinion more clearly draws a line between protected legal speech and an attorney’s conduct toward a client, reinforcing that alleged conflicts of interest and nondisclosure fall outside the law’s protections.”
• “A trial court had disqualified Davis from representing Elizabeth Weston in the divorce, citing his prior work for Weston and finding a conflict of interest.”
• “In 2021, after Davis’ disqualification, Weston sued Davis and his firm, Davis & Santos, alleging they breached their fiduciary duty and committed fraud by agreeing to ‘secretly represent’ Elizabeth Weston while simultaneously representing him and three family companies.”
• “The appeals court ruling sends the case back to state District Court in Comal County, where Weston and a few family firms are seeking damages and the return of millions of dollars in legal fees paid to Davis over more than a decade. The appeals court did not determine whether Davis committed misconduct.”

David Kluft asks: “If I get an order to show cause that asks whether I used #AI, can I refuse to respond because my legal research is work product?” —

• “Two TN attorneys submitted briefs to the 6th Cir. with over two dozen fake citations and misrepresentations of the record, which appeared to have been generated by AI. The Court issued a show cause order asking, inter alia, who wrote the briefs, whether they used generative AI, and how they cite-checked the legal authorities.”
• “Instead of providing a substantive response to the show cause order, the lawyers claimed that the ‘attorney-client and work-product privilege excused compliance with the show cause order’ because compliance would reveal the ‘details of the Respondent attorney’s work product and practices.'”
• “The Court disagreed and held that, under the privilege and work product doctrines, ‘we may not compel the disclosure of a lawyer’s notes, prior drafts of briefs, or legal advice absent waiver … But the order to show cause sought no such thing. Whether and how the briefs were cite-checked does not implicate conversations regarding legal advice, nor do they ask for any work product of any kind.’ The lawyers were sanctioned with $15K each in fines, attorneys’ fees, and a disciplinary referral.”
• Decision: here.

“California Bar Proposes Rule Requiring Lawyers to Verify Every AI Output — and Five Other AI-Focused Ethics Changes” —

• “When using any technology — including AI — a lawyer ‘must independently review, verify, and exercise professional judgment regarding any output generated by the technology that is used in connection with representing a client.'”
• “That language appears in a new comment to Rule 1.1 on competence proposed by the State Bar of California’s Standing Committee on Professional Responsibility and Conduct (COPRAC) as part of a package of AI-related amendments to six of the state’s Rules of Professional Conduct.”
  “The proposed changes would, for the first time, write specific AI obligations into California’s rules. The changes span the rules on competence, client communication, confidentiality, candor toward tribunals, and supervision of both lawyers and other staff.”
• “The rulemaking was set in motion by the California Supreme Court itself. In an Aug. 22, 2025, letter to the state bar’s interim executive director, the court’s clerk and executive officer directed COPRAC to consider whether the guiding principles from the bar’s November 2023 ‘Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law’ should be incorporated into the formal rules.”
• “The court also directed the bar to consider guidance specifically addressing ‘agentic AI’ tools — systems that can plan and execute tasks with little or no human intervention.”
• “COPRAC approved the proposed amendments at its March 13, 2026, meeting and opened the 45-day comment period. Rather than drafting a standalone AI rule, the committee wove new language into six existing rules, reflecting a view that AI sharpens existing ethical duties rather than creating entirely new ones.”
• “Whereas California’s 2023 practical guidance was a ‘living document’ with no binding authority, these proposed amendments would change that by making AI-specific obligations part of the enforceable rules.”
• “Most states that have addressed AI in legal practice have done so through ethics opinions, which carry persuasive but not always disciplinary force. California’s approach, if finalized, would be more muscular.”
• “I have tracked the adoption of the duty of technology competence across jurisdictions on a dedicated page on this blog. These proposals represent among the most detailed and comprehensive set of AI-specific rule amendments I have seen any state bar put forward.”
• “A new Comment 5 to Rule 1.4 addresses when lawyers must disclose their use of AI to clients. The proposed language provides that when a lawyer’s use of technology, including AI, ‘presents a significant risk or materially affects the scope, cost, manner, or decision-making process of representation,’ the lawyer must communicate ‘sufficient information regarding the use of technology to permit the client to make informed decisions regarding the representation.'”
• “The comment adds that lawyers must continue to evaluate their communication obligations throughout a representation based on ‘the novelty of the technology, risks associated with the use of the technology, scope of the representation, and sophistication of the client.'”
• “Amendments to Rule 1.6, Confidential Information of a Client. The confidentiality rule, which prohibits lawyers from revealing confidential client information, gets a new Comment 2 that expand sthe definition of ‘reveal’ to encompass AI use.”
• “Under the proposed language, ‘reveal’ includes ‘exposing confidential information to technological systems, including artificial intelligence tools, where such exposure creates a material risk that the information may be accessed, retained, or used, whether by the technological system or another user of that technological system, in a manner inconsistent with the lawyer’s duty of confidentiality.'”
• “This means that inputting client information into an AI tool — even if the lawyer never intends for anyone else to see it — can constitute a revelation of confidential information under the rules if there is a material risk the system or its other users could access, retain or use that data. Lawyers using cloud-based AI tools with unclear or unfavorable data retention and training policies need to pay attention to this.”
• “Amendments to Rule 3.3, Candor Toward the Tribunal. This amendment directly addresses the AI hallucination problem that has generated judicial sanctions and considerable alarm across the profession. A new Comment 3 states that ‘a lawyer’s duty of candor towards the tribunal includes the obligation to verify the accuracy and existence of cited authorities, including ensuring no cited authority is fabricated, misstated, or taken out of context, before submission to a tribunal, including any cited authorities generated or assisted by artificial intelligence or other technological tools.'”
  “The existing rule already prohibits knowingly misquoting authority or citing overruled decisions. The new comment makes explicit that AI-generated citations are not exempt from those obligations, and that the verification duty extends specifically to fabricated, misstated or decontextualized authority.”
• “Amendments to Rule 5.1, Responsibilities of Managerial and Supervisory Lawyers. The proposed amendment adds AI governance to the list of matters that managerial lawyers at law firms must address through internal policies and procedures.”
• “…the independent verification requirement in Rule 1.1 is worth emphasizing. It does not say lawyers should generally be careful with AI output. It says they must independently review, verify and exercise professional judgment regarding any output used in client representation. That is a strict standard, and one that cuts against any casual reliance on AI-generated work product.”
• “Third, the confidentiality amendment’s expansion of ‘reveal’ is practically significant. Lawyers accustomed to thinking of confidentiality as a disclosure-to-humans concept will need to rethink how they select and use AI tools in light of this definition.”
• “Although the comment period has closed, the rulemaking process continues. COPRAC will review public input and could modify the proposals before they advance. The California Supreme Court ultimately has authority over the Rules of Professional Conduct. Whether and when these amendments might take effect remains to be seen.”

“Courtroom Hug Gets Miami Judge DQ’d From Trump Library Case” —

• “A Miami-Dade state court judge is disqualified from overseeing further proceedings in the legal battle over a local college’s decision to donate its land for a Trump Presidential Library. An appellate panel found the judge showed bias toward the plaintiff by giving him a hug after a hearing, and seemingly thanking him for filing the suit. But some of the lawyers involved in the litigation say the judge’s removal from the case is unfair to her.”
• “The ruling from Florida’s Third District Court of Appeal takes Miami-Dade Circuit Judge Mavel Ruiz off plaintiff Marvin Dunn’s lawsuit against the Miami-Dade College Board of Trustees.”
• “Dunn sued after the trustees voted last year to donate a 2.6-acre property worth at least $67 million as the site of a planned presidential library for Donald Trump. Dunn, a local historian and one-time Miami mayoral candidate, alleged the board’s vote was not properly advertised under Florida’s public records laws.”
• “Ruiz initially blocked the land transfer, and set a trial date for August 2026. She ultimately dismissed Dunn’s suit with prejudice in January, but not before denying a motion by defense counsel to get her to step down from the case.”
• “According to defense counsel, the judge’s alleged actions at a December hearing showed bias toward Dunn.”
• “According to the transcript of the hearing included in the motion to disqualify Ruiz, the judge compared Dunn’s case to one filed ‘years ago,’ by a ‘gentleman’ who was a ‘pillar of the community’ that had sued a governmental agency that he ‘did not believe … was doing the right thing for the citizens of this community.'”
• “‘He [the plaintiff in that case] put his money where his mouth is. He came in second. He was not successful in that action, but in the order, this court wrote how important a member of this community is when they are willing to put themselves, their money and their home on the line for the better good. And that’s what you [Dunn] did, sir,’ Ruiz said. ‘It’s my understanding that you mortgaged your house to pay for the stiff bond that this court imposed on you and you did it. And I thank you.'”
• “After the hearing, Ruiz allegedly descended from the bench to shake hands and ‘exchange pleasantries’ with attorneys on both sides before she ‘briefly hugged’ Dunn, according to Dunn’s sworn declaration included in court records.”
• “Dunn’s attorneys, Andres Rivero of Rivero Mestre and Richard E. Brodsky of The Brodsky Law Firm, argued in a March filing that Ruiz’s ultimate dismissal with prejudice showed she was not biased toward their client, and claimed the embrace in question followed warm greetings to both parties and came at a point when the judge ‘obviously’ believed the case was over.”
• “But the per curiam panel opinion, signed by Judge Ivan F. Fernandez, Judge Thomas Logue and Judge Monica Gordo, held the evidence of bias was ‘legally sufficient to create in a reasonably prudent person a well-founded fear that they would not receive a fair hearing before the judge.'”
• “The appellate court also found Ruiz should not hear Dunn’s motion for reconsideration of her January dismissal.”
• “Meanwhile, Jesus M. Suarez, partner at Continental and attorney for the college, said ‘the trial court should have recused itself in the first instance.'”
• “Judicial ethics bar Ruiz from commenting on open cases, the court’s spokesperson, Eunice Sigler, noted.”
• “Ruiz is one of only two incumbent state court judges in South Florida who has drawn a challenger this election cycle.”

“Judge Who Laid the Groundwork for Trump’s Supreme Court Battle Used to Work for Him” —

• “The appellate judge whose dissent laid the groundwork for a Supreme Court intervention in E. Jean Carroll’s defamation case against President Donald Trump worked in the White House in 2019, when Trump made the defamatory comments. It’s an apparent conflict of interest that’s made even more relevant given the judge’s forceful defense of Trump’s actions at the time.”
• “Judge Steven Menashi, who authored the dissent, didn’t recuse himself from the case — nor does it appear in the court record that he ever revealed his proximity to Trump at the time. But his actions could result in the case being thrown out or even put taxpayers on the hook for the $83 million granted to Carroll following a 2024 civil trial in which Trump was found liable for defamation for denying that he sexually assaulted her.”
• “Carroll scored a temporary victory in her long-running fight against Trump on Wednesday, when a federal appeals court in New York said it would not reconsider one of two defamation cases against Trump. However, a lone Trump-appointed judge penned a dissent that could breathe new life into Trump’s side — without acknowledging his own time in the Trump White House.”
• “Menashi was a special assistant and associate counsel to the president in June 2019, when the administration put out a statement saying that Carroll was merely ‘trying to sell a new book’ and when Trump told a reporter on the White House lawn that ‘it’s a total false accusation and I don’t know anything about her.’ Jurors in Manhattan considered those two statements when they concluded Trump acted with malice and awarded Carroll a massive sum.”
• “The timing means that Menashi — who has been guarded about his interactions with Trump and whatever legal advice he gave the president — was working for the defendant in the case during the exact moment that led to the successful lawsuit.”
• “On Wednesday, the Second Circuit Court of Appeals refused Trump’s request to have the entire bench reconsider a smaller panel’s decision last year to uphold the massive punitive damages against Trump. That smaller panel had accused the president of ‘extraordinary and unprecedented conduct’ in his June 2019 statements against Carroll, supporting the view that he wasn’t shielded by presidential power when he did so.”
• “However, the decision also came with Menashi’s vociferous 54-page dissent, which planted the seeds for the Supreme Court to weigh in.”
• “In it, he criticized what he called ‘unauthorized damages, duplicative compensatory damages, and a grossly excessive monetary figure for a defamation claim.’ He also highlighted what he called ‘several errors’ in the case that made it ‘obvious that the president was acting within the scope of his office when responding to reporters at the White House.'”
• “Menashi also disagreed that Trump should be held personally liable in the case. Menashi wrote that it ‘made no sense’ for judges to block then-Attorney General Pam Bondi’s attempt to remove Trump and name the U.S. government as the defendant under provisions in the Westfall Act, which protects government employees from lawsuits while on the job — though the trial judge considered those arguments at length and even had appellate courts in New York and Washington, D.C. weigh in.”
• “But most importantly, he gave Trump’s lawyers the key phrase they need to get the Supreme Court’s attention, writing that the appellate’s support of Carroll ‘created a circuit split.'”
• “‘The Supreme Court may want to consider whether that is how the Westfall Act applies to the president,’ Menashi wrote.”
• “When Menashi was nominated to the bench in 2019, CNN surfaced editorials from his days as a columnist for the conservative New York Sun, in which he attacked feminists, gay rights groups and diversity efforts. He was lambasted by critics as ‘one of Trump’s most radical picks’ and accused of authoring ‘Trump’s worst policies for immigrants and women.'”
• “But Menashi refused to detail his work for the Trump administration, rebuffing questions from then-Sen. Dianne Feinstein about his interactions with White House aide Stephen Miller and declining to say whether he had anything to do with the administration’s policy that separated migrant families and children at the U.S.-Mexico border.”

David Kluft asks: “Can an IPO underwriter’s counsel be adverse to the stock issuer in a subsequent patent case?” —

• “Company A, a sleep apnea device maker, retained a financial services company (the Underwriter) to launch its initial public offering. The Underwriter was represented by a law firm (the Firm) [Latham], which reviewed Company A’s financial and product information as part of the due diligence.”
• “The Firm withdrew after coming to the conclusion that Company’s A’s product infringed Company B’s patents. The Firm later filed a patent infringement suit on behalf of Company B against Company A. Company A asked the Firm to withdraw, but it refused and instead implemented an ‘ethical screen.'”
• “Company A moved to disqualify the Firm. The Firm argued that it could not find ‘a single case where a court has disqualified underwriter’s counsel for being adverse to the stock issuer in a subsequent case.'”
• “However, the Court agreed that Firm A’s continued involvement in the case ‘would appear deeply improper’ given its ‘repeated and consistent’ access to Company A’s internal documents while representing the accounting firm. The Court further stated that even if the ethical wall worked and the litigation team received no confidential information, the ‘appearance of impropriety extends to the … litigation team here.'”
• “The Court found that although the Firm and Company A ‘never had an attorney-client relationship … this case is one of the likely few where the appearance of impropriety of a continued representation is so striking that disqualification must follow.'”
• Order: here.

“Private Equity in Law Firms: Trend, Impact, and Legality” —

• “Private equity (PE) has been circling the legal sector for years—but in the last 24 months, the pace has quickened, powered by regulatory openings in the United States (notably Arizona and Utah), a decade-plus of experience in the U.K. and Australia, and mounting investor interest in professional services cash flows. Yet, the U.S. landscape remains a patchwork. Let’s look at the trend lines, how PE is getting access, and the legality in key jurisdictions.”
• “PE’s interest in law firms mirrors its push into other professional services (accounting, physician practice management, engineering): predictable cash flows, high margins, low capex, and a highly fragmented market ripe for rollups and platform plays. After years of structural barriers, dealmaking efforts accelerated over the last 12 months, aided by creative structures and a slowly improving regulatory environment.”
• “Model Rule 5.4, widely adopted by states, restricts fee-sharing and nonlawyer ownership. The American Bar Association reaffirmed that the ban reflects the profession’s core values in Resolution 402 (Aug. 2022), even while it encourages evidence-based regulatory innovation in separate policy statements. That said, the door has opened in a few places: Arizona abolished its version of Rule 5.4 in 2021 and created a licensing regime for alternative business structures (ABS) entities, and Utah launched a supreme-court–supervised ‘regulatory sandbox’ in 2020, extended through 2027.”
• “Managed services organizations (MSOs) and contractual workarounds. In non-ABS states, PE gravitates to MSO structures: Investors own the business services affiliate—marketing, HR, tech, intake—while the professional entity remains lawyer-owned. Properly constructed, MSOs avoid impermissible fee-sharing and preserve lawyers’ independent judgment, but they must be engineered carefully to withstand scrutiny under Rule 5.4 and UPL statutes.”
• “Adjacent bets—litigation finance and alternative legal service providers (ALSPs). Some PE funds back litigation financiers or ALSPs that contract with firms, creating capital adjacency without owning the law firm itself. As a policy matter, critics argue this still raises independence and conflict concerns if investors push for early settlement or aggressive portfolio economics; proponents counter that funding increases access to justice. The ethics literature has long flagged investments that intertwine with client matters as conflict-prone.”
• “The ABA House’s 2022 Resolution 402 distilled a long-standing concern: Outside owners may pressure firms to prioritize returns over professional duties, risking client confidentiality, conflicts, and independence. That resolution reaffirmed feesharing limits as core to the profession, even while keeping the door open to measured experimentation.”
• “ABS regimes commonly require designated compliance officers, suitability checks on nonlawyer owners, and firmwide undertakings to abide by professional rules. Arizona’s ABS framework mandates a compliance lawyer and disclosures for ‘authorized persons,’ while D.C.’s long-standing Rule 5.4 variant allows limited nonlawyer partners who provide professional services and agree to be bound by ethics rules—a narrow exception that has functioned without headlines for years.”
• “Whether PE invests directly or via MSOs, firms must enhance conflicts-checking to capture investor-level affiliations, portfolio company ties, and data-sharing risks. Ethics authorities have long warned that lawyers’ financial entanglements with clients or third parties heighten malpractice and fiduciary risks—lessons that carry over to investor relationships.”
• “Model Rule 5.4 baseline (most states). No nonlawyer ownership, no fee-sharing with nonlawyers (with narrow exceptions such as employee profit-sharing and payments to a deceased lawyer’s estate). Outside investors cannot own law firms or control legal practice.”
• “Critics argue that opening equity to nonlawyers risks subordinating the lawyer’s role as officer of the court to investor imperatives. The ABA’s 2022 resolution reanchors this value proposition, warning that incremental erosion of Rule 5.4 could ‘destroy our profession’ to the detriment of clients if not carefully checked.”
• “Advocates of targeted reform, including academics and APRL, contend that ethical independence can be preserved through governance, while capital is essential to scale consumer-facing innovation and improve access to justice—especially given the U.S.’s poor rankings on affordability of civil legal services. Their proposals seek informed consent-based fee-sharing and regulated ownership with enforceable independence safeguards.”

“States Consider Bans on Private Equity Law-Firm Acquisitions” —

• “Private equity has barely begun investing in law firms, but the backlash has already started. Lawmakers in three states are considering bills to make it harder for buyout firms and other corporate investors to buy law practices, a burgeoning investment strategy that was long off limits for private equity.”
• “In California and Illinois, legislators in April advanced bills that would cement prohibitions on nonlawyers’ owning or controlling legal practices. In Colorado, a bipartisan group of lawmakers introduced a similar bill last week, which on Wednesday passed the House Judiciary Committee.””California Assembly Bill 2305, which the state’s lower chamber approved on April 6, will ‘close the loopholes’ corporate investors use to influence legal practices, said Assemblymember Ash Kalra, who introduced the bill.”
• “Kalra, a Democrat who represents San Jose and neighboring areas, fears that private-equity money may reshape the legal profession like it has the medical sector and other industries. He thinks the bill has the support it needs to pass California’s state Senate by the Aug. 31 end of the legislative session. ‘We have seen how private equity has operated in many different industries to extract profit and not reinvest in the long-term health of the industry,’ Kalra said. “
• “His bill will ‘ensure that lawyers make decisions based on their clients’ best interests, not the best interests of their investors,’ he said”
• “But while it remains forbidden for private equity to directly own law firms in almost all states, firms have developed workarounds to control practices without violating the rules. Private-equity investors have realized that the same structure that allows them to invest in medical practices—the management-services organization, or MSO—can be repurposed to invest in legal practices.”
• “The interest is on both sides, as more lawyers reconsider their commitment to professional autonomy. The prospect of artificial-intelligence tools’ reshaping the profession has convinced some firms to seek outside capital to invest in technology and operations.”
  Private-equity deal activity is increasing, though mostly for smaller consumer-facing law firms or AI-focused startups rather than brand-name corporate firms. Blackstone, for instance, invested in AI law firm Norm Ai. In January, fledgling private-equity firm Uplift Investors acquired Louisiana personal-injury firm Dudley DeBosier Injury Lawyers.”
• “Activity is continually increasing, though few deals are made public, said Trisha Rich, a partner at law firm Holland & Knight who helps structure MSO investments. Rich says she has completed 15 MSO transactions in the past six months and is working on about a hundred more.”
• “But just as private-equity investment is coming under scrutiny in the healthcare sector, more critics are asking whether this wave of private equity money will improve the legal profession.”
• “‘I don’t want private-equity investment in law to have the same consequences we’re seeing in the healthcare industry,’ said Colorado State Sen. Lindsey Daugherty, a Democrat who co-sponsored the bill in the Senate. Daugherty, who represents suburbs northwest of Denver, says she is already seeing evidence of more out-of-state corporate investment in Colorado’s legal field.”
• “The California bill, for instance, has the backing of the Consumer Attorneys of California, a lobby group. Saveena Takhar, senior legislative counsel for the Consumer Attorneys of California and a lobbyist for the bill, said she is not certain how much private-equity money is flowing into California’s legal field, but there are some indications—an increase in attorney advertising, for instance—that it is significant.”
• “This raises the possibility that undisclosed financial interests could be compromising the attorney-client relationship, she said. ‘Part of the problem is how opaque this all is,’ Takhar said.”
• “In Colorado, a bipartisan group of legislators on April 21 introduced their own bill, which among other changes would prohibit law firms from sharing revenue with nonlawyers. The bill has until May 13 to be approved by both chambers.”
• “The Illinois General Assembly in April passed a similar bill to bar private-equity interference in legal practices, and the measure is now under consideration in the Senate. “

David Kluft asks: “Did Microsoft Teams AI just secretly record my meet and confer with opposing counsel?” —

• “After the Court ordered the parties in a California federal litigation to meet and confer over an issue, Plaintiff’s counsel filed a report with the Court in which they accused Defendant’s counsel of making certain admissions during the call. As proof of these admissions, Plaintiff presented ‘transcripts that appear to have been automatically generated by an Artificial Intelligence tool associated with the video conference software (Microsoft Teams) utilized by the parties,’ which turned out to be Otter.ai.”
• “Defendant objected on the grounds they were ‘completely unaware that it was being recorded until after the meeting ended and an email permitting a download of the transcript was provided.’ It turns out that Plaintiff was also unaware of the recording and received the same email, and thought Defendant had somehow triggered the AI.”
• “The Court, careful to put the word ‘transcript’ in quotes, saw ‘no reason to engage in greater depth in the resulting disputes over the ‘transcript’ because: (1) neither party appears to have known enough about Otter.ai to have used it deliberately in an unlawful or improper way; and (2) the Court will not consider … any arguments based upon those ‘transcripts’ for the simple reason that no party has made any effort to demonstrate its accuracy or trustworthiness.'”
• Order: here.

“Chancery Imposes Attorneys’ Fees for Breach of Confidentiality Order” —

• “The Delaware Court of Chancery recently imposed attorneys’ fees in connection with a request for sanctions for violation of a Confidentiality Order in the matter styled Accelerant Twister, LLC v. Marjo, LLC, C.A. No. 2023-0887-LWW (Del. Ch. April 10, 2026).”
• “This short letter ruling followed a prior decision in this case to disqualify a putative expert, based on the court’s finding that there was a ‘meaningful failure to obey the clear terms’ of the governing Confidentiality Order. Slip op. at 2, n.2 (citing transcript of rulings from the bench after a hearing on January 23, 2026).”
• “During that hearing, after briefing, the court found that over 300-pages of confidential material were submitted to a designated expert nearly six months before the expert executed the required undertaking. Id.”
• “The court awarded reasonable attorneys’ fees incurred in ‘bringing and briefing’ the motion for sanctions as a remedy. Id.”
• “In the prior Bench Ruling, the court found that a conflict of interest provided grounds for disqualification based on the prior representation of one of the parties. The court also found that the Confidentiality Order was flouted by disseminating sensitive material to the putative expert months before he agreed to be bound by it. The award of attorneys’ fees was necessary to cover the time spent to investigate the violation and to litigate the contumacious behavior. Slip op. at 3.”
• “After a discussion about the reasonableness of hourly rates, the court concluded that a blended rate of just over $1,000 was reasonable under the circumstances, referring to Rule 1.5 of the Delaware Lawyers’ Rules of Professional Conduct and the economic survey for hourly rates conducted by the American Intellectual Property Law Association. Patent-related issues in this case were integral, and the attorneys who performed the work had specialized skills in various other areas of the law. The partners involved ranged in experience from 12 through 40 years of practice.”

“AI Is Taking Over Audit Functions. Accounting Needs to Get Ready” —

• “KPMG’s rollout of advanced artificial intelligence agents is the start of something structurally significant: a ‘K-shaped’ remodeling of professional services, in which the top accelerates, the bottom collapses, and the distance between them becomes the competitive question.”
• “Last week’s news that KPMG is cutting roughly 10% of its US audit partners is the K-shape made literal. The average partner whose economics rested on leverage rather than origination is being removed. The pyramid is being compressed from both ends at once. Graduate hiring is being switched off at the bottom, and the average partner is being asked to leave at the top.”
• “Thomas Mackenzie, KPMG’s audit chief technology officer, recently said that within two to three years there will be ‘next to no human beings’ performing routine audit testing at KPMG. This is the most honest thing any Big Four leader has said about the direction of the profession this year. Vouching, transaction testing, and other tasks that for decades defined early-career life in public accounting are being absorbed by AI agents.”
• “But what does this do to the pipeline that produced every audit partner currently signing opinions? Audit has always developed judgment through repetition—exposure to hundreds of small misstatements before forming a view on a material one. Remove this type of apprenticeship and you have removed the mechanism by which the profession reproduces itself.”
• “Mackenzie’s own framing was telling. He said he will no longer hire a college graduate to create workpapers. That is a reasonable shift in job design and a complete rewrite of the conditions under which professional judgment has historically been developed.”
  K-shaped Remodeling”
• “The upper arm accelerates. Exceptional partners do more because clients buy them rather than the firm behind them, and AI amplifies their output rather than substituting for it. The lower arm collapses due to commoditized delivery work, time-and-materials billing, standardized compliance output, and the average partner whose economics rested on leverage rather than origination. AI actively widens the gap between the two because the tools that amplify the top are the same tools that substitute for the bottom”
• “This plays out at a firmwide level, and we are seeing it in real time. Looking at the first-quarter 2026 data, firms that have already made the shift to their operating models are clearly outgrowing those that haven’t.”
• “This is a pricing reset. The bottom half of the market becomes cheaper, faster, and harder to differentiate. The top becomes more expensive, more concentrated, and more dependent on individuals rather than institutions.”
• “In audit, the partner is amplified, the senior manager is divergent, and the associate is substituted. Each category carries a different economic, organizational, and talent implication. The firms that are planning workforces at firm-average level rather than role-by-role are going to find themselves with the wrong people in the wrong places by 2028.”
• “The KPMG news signals a deeper shift: that the old assumption about professional services growing as a tide that lifts every firm equally is over. The firms pulling ahead share a recognizable profile.”
• “They are private equity-backed or well-capitalized; their leadership that has translated conviction into decisions rather than working groups. They are already rebuilding workflows around AI, creating proprietary intellectual property on top of foundational models and restructuring compensation to attract the partners the emerging model requires.”
• “The private equity community has moved past the question of whether AI disrupts professional services. It is underwriting assets on how seriously and how early management acted. If a firm is still in the monitoring phase, it has already answered the question—just not in the way leadership thinks it has.”

Bill Freivogel has been busy indeed spotting interesting updates!Presented with our thanks are several of his April highlights:

• Chaowai 101 AOA LLC v. 101 A of A LLC, 2026 NY Slip Op 31493(U) (N.Y. S. Ct. N.Y. County April 9, 2026).
  • “Very complicated LLC ownership case. Law Firm started representing an LLC that owned a NYC building. Resulting from a number of disagreements, Law Firm wound up not representing the LLC/owner, but representing a prospective new member of the LLC/owner. LLC/owner moved for Law Firm to turn over its files relating to this matter and to disqualify Law Firm from representing the new LLC member”
  • “In this Order the justice ordered Law Firm to turn over certain of its files, but not others, and ordered Law Firm not disqualified from representing the new LLC member.”
• In re Arbit, 2026 WL 1078065 (Fed. Cir. April 21, 2026).
  • “Individuals A, B, and C are ‘named inventors’ of the patent in question (‘the Patent’). C filed this case against A and B ‘for correction of inventorship,’ to establish C as the sole inventor of the Patent. Evidently, A and B would like to sell their interest in the Patent to Lincoln Diagnostics (‘Lincoln’).”
  • “Lincoln is paying A and B’s legal fees for this case. When C learned of Lincoln’s role, C moved to disqualify the law firm (‘Law Firm’) for A and B. C did not claim he was a former client of Law Firm.
  • “The magistrate judge granted the motion to disqualify, and the district judge affirmed. In this Order the Federal Circuit denied A and B’s petition for mandamus (affirmed the district court). The court discussed primarily N.J. Rule 1.8(f)(2), which deals with abuses from litigants’ accepting compensation from non-parties. [Our note: No one raised or discussed standing. We get how these payment arrangements can be abused, but nowhere has C shown how this arrangement threatens the fair administration of justice, or how he is otherwise prejudiced.]”
• N.L. v. J.D, 2026 NBKB 77 (CanLII) (Ct. K.B. N.B. April 20, 2026).
  • “Mother and Father are litigating an issue relating to their child. Lawyer, at Firm 1, represented Mother for several months. Lawyer then moved to Firm 2, which represents Father.”
  • “Mother moved to disqualify Firm 2. In this Decision the court denied the motion. Before Lawyer’s move, Firm 2 began erecting a screen between Lawyer and the lawyers representing Father including instructing personnel on their contacts with each other, maintaining locked files and so forth, all in compliance with New Brunswick Rule 3.4-20.
• Boyd v. H&R Accounts, Inc., No. 25-12834 (E.D. Mich. April 17, 2026).
  • “Plaintiff, represented by Lawyer, is suing a debt collection agency (‘H&R’) for violating debt collection laws. H&R moved to disqualify Lawyer because Lawyer had previously represented debt collection agencies affiliated with H&R in matters substantially related to this one.”
  • “In this thoughtful and comprehensive opinion the court granted the motion to disqualify. Lawyer had never represented ‘directly’ H&R or its corporate parent. However H&R has been a member of a closely related collection of agencies, a several of which Lawyer has represented in a number of cases.”
  • “The issues in those cases were largely similar to the issues here. A number of corporate officials have overlapped with various of these agencies, including the ‘Chief Compliance Officer,’ with whom Lawyer has worked closely. In short, ‘the Court finds that no amount of effective and careful lawyering can obviate the concerns raised in this case.'”
• Pan-Oceanic Eng’g Co., Inc. v. Grange Mut. Ins., 2026 IL App (1st) 250511-U (Ill. App. April 14, 2026).
  • “Illinois prohibits casualty insurers from insuring punitive damages in many situations. In this case an insured went to trial in a vehicle accident case facing claims of compensatory and punitive damages. One of several issues was whether the insurer’s retained ‘panel counsel’ (‘Lawyer’) had a conflict of interest.”
  • “In this opinion the appellate court described the ways Lawyer did have a conflict. Lawyer had previously alerted the insured of the advisability of hiring independent counsel, but the insured agreed to allow Lawyer to proceed for insured.”
  • “The court held, given the conflict, the insurer must pay Lawyer an hourly rate greater than that of panel counsel. We are not giving you the full picture, given the limitations of this site. The court’s discussion is totally about Illinois insurance law and seems of limited use elsewhere.”

David Kluft asks: “Can I get the judge recused at the last minute by hiring his best friend as my lawyer?” —

• “In a CA business dispute, the defendant was initially represented by some big firms, but then after years of discovery looked for a local litigator to join the trial team. The litigator they hired was a ‘close personal friend’ of the presiding judge and knew his appearance would cause the judge to recuse himself.”
• “The defendant waited to file the litigator’s appearance until four months later, after some motions had been ruled on. The judge as predicted recused himself.”
• “Plaintiff moved to disqualify the lawyer and reassign the case back to the original judge. The Court noted that the motion essentially accuses opposing counsel of violating Rules 3.2 (delay), 3.5 (disruption) & 8.4(d) (conduct prejudicial to the administration of justice). The Court denied the motion because the appearance of new counsel did not disrupt any pending motions and there was no evidence it was done for purposes of delay.”
• Decision: here.

“The Rising Utilization of Hybrid Dispute Resolution Procedures and Potential Ethical Concerns” —

• “As commercial litigators face mounting pressure to resolve disputes efficiently and expeditiously, hybrid dispute resolution mechanisms have become increasingly prevalent. Many commercial contracts now contain what are commonly referred to as ‘step clauses,’ requiring parties to first attempt mediation and then proceed to arbitration if mediation proves unsuccessful. Among the various hybrid procedures available is the option to engage in processes commonly referred to as arb-med or med-arb. In these structures, the parties may begin in arbitration and later pivot to mediation, or vice versa.”
• “At first glance, these arrangements may appear uncontroversial. However, depending upon the order in which the process is structured, significant ethical concerns and challenges may arise, particularly when the same individual is tasked with serving as the neutral in both roles. This hybrid model, particularly in its ‘pure’ form where the same neutral mediates and later arbitrates, rests on a structural flaw. Once a neutral mediates a dispute, that neutral cannot later serve as arbitrator without compromising confidentiality, impartiality, and due process. No amount of advance waiver cures that defect.”
• “To fully understand the issue, one must first examine the distinguishing features of each process. In mediation, parties are encouraged to ‘bare all’ to the mediator in order to maximize the effectiveness of the process. This may include sharing litigation strategy, settlement positions, assessments of the strengths and weaknesses of the case, business or reputational concerns, and other confidential information that would never be presented openly in court.”
• “The disclosure of this type of information enables the mediator to function in part as a case evaluator, assisting the parties in exploring their BATNA (best alternative to a negotiated agreement) and WATNA (worst alternative to a negotiated agreement). The core of the mediation process depends upon the confidentiality of information shared with the mediator and the mediator’s candor with the parties.”
• “During mediation, the neutral engages in private ex parte communications with all parties, including both clients and counsel. The mediator becomes the repository of information, sharing only what the parties expressly authorize. At no point does the mediator decide the dispute. Even when a mediator’s proposal is offered, it is not necessarily a formal case evaluation, though evaluative components may be present.”
• “Arbitration, by contrast, functions much more like a judicial proceeding. While the arbitrator is neutral in the sense of having no affiliation with either side, the arbitrator is ultimately charged with making a determination. At some point, the arbitrator must assess the evidence, apply the governing law, and render a decision.”
• “Just as in court, the arbitrator must remain insulated from confidential communications, private party strategies, or any information not formally presented as evidence. Arbitrators cannot engage in ex parte communications with the parties, the very practice that forms the cornerstone of mediation, and they do not engage in private interactions with clients outside the formal proceedings.”
• “This raises a fundamental question: how can the same neutral perform both roles without compromising the integrity of the process? Can the neutral begin as a mediator and later become an arbitrator, or can an arbitrator transition into the role of mediator for the same dispute?”
• “The problem arises if the mediation fails and the parties attempt to return to arbitration with the same neutral. The same concern exists when the process begins with mediation and then transitions to arbitration with the same individual. In either scenario, the neutral is no longer truly neutral. Having served as mediator, the neutral possesses information not in evidence, not subject to cross-examination, and potentially not equally disclosed to both parties. The neutral can no longer serve as a true fact-finder without compromising the adjudicative role.”
• “Parties would never present to an arbitrator the same information they freely disclose to a mediator. When the mediator becomes the arbitrator, the neutral now possesses confidential information unavailable to one side in the formal proceeding. This may include settlement flexibility, perceived weaknesses in a party’s case, emotional or reputational pressures, and strategic considerations. Such information cannot simply be ‘unlearned.'”
• “Some commentators have suggested that parties may waive any perceived conflict through advance agreement. However, such waivers provide limited protection. If the arbitration proceeds with the same neutral after an unsuccessful mediation and one side ultimately loses, as inevitably happens, there is a substantial risk that the losing party will suspect that the decision was influenced by confidential disclosures. Under New York law, evident partiality remains grounds for vacatur. That risk cannot be fully eliminated through contractual drafting. Indeed, the process itself may become vulnerable to challenge, thereby undermining the adjudicative role of the neutral.”
• “Moreover, the concept of informed consent is often illusory. Parties frequently fail to appreciate the psychological impact that confidential disclosures may have on subsequent decision-making.”
• “Even experienced lawyers may underestimate how knowledge of settlement ranges or strategic weaknesses can shape a final award. Consent to a structural conflict does not eliminate the conflict itself.”
• “Due process concerns also remain, even with waiver language. A party cannot meaningfully rebut information privately disclosed by the opposing side during mediation. The evidentiary boundaries of the arbitration effectively dissolve, creating a record that cannot be properly tested. The resulting award may therefore be vulnerable to challenge based on evident partiality or procedural unfairness. The confidentiality rules governing mediation and arbitration exist precisely to preserve the integrity of each process.”
• “One might ask why this is even a concern when the solution appears simple: change the neutral. While that solution seems straightforward, there remains pressure in some cases to maintain the same neutral throughout the process. In part, this stems from economic considerations. A neutral who is already familiar with the facts and nuances of the case may reduce costs and increase efficiency. The parties may also become comfortable with the neutral and confident in his or her understanding of the dispute.”
• “More cynically, some parties may believe they have influenced the neutral’s perception of their case and therefore expect a favorable outcome. For that very reason, however, the practice is fraught with risk. Any resulting award may be vulnerable to challenge based on claims of evident partiality or procedural unfairness.”
• “Courts generally view adjudicative processes that blur the line between ex parte communications and decision-making authority with skepticism. Ethical codes typically discourage ex parte communications in arbitration, while mediation rules often prohibit mediators from reporting to decision-makers. Med-arb and arb-med constructs risk collapsing these distinctions. Attempting to contract around such fundamental procedural protections through waiver provisions is simply poor risk management.”
• “Some proponents argue that this hybrid process is no different from situations in which a judge conducts a settlement conference and then presides over the trial. However, the analogy is imperfect. Judicial settlement conferences have themselves been criticized for creating concerns about impartiality. Lawyers often report discomfort with judges who both encourage settlement and later adjudicate the dispute.”

“Norton Rose Fulbright sued for malpractice over botched patent application” —

• “A defunct advertising-data company has sued law firm Norton Rose Fulbright in Illinois state court, accusing its lawyers ​of mishandling a patent application and neglecting to inform the ‌company about it for years.”
• “Veil Global Technologies, formerly known as Advocado, said in a lawsuit filed on Tuesday that Norton Rose hid its mistakes and cost the ​company valuable patent rights, requesting at least $100 million in ​damages from the firm.”
  Norton Rose said in a statement on ⁠Wednesday that it intends to ‘vigorously defend the case in court, ​where the facts and law matter.’ Attorneys for Veil declined to comment.”
• “Veil, then ​Advocado, hired Norton Rose in 2022 to handle its application for a U.S. patent covering technology for predicting the outcomes of marketing campaigns. Veil said in ​the lawsuit that Norton Rose failed to pay a required fee ​at the U.S. Patent and Trademark Office later that year, which led to ‌the ⁠office withdrawing the application.”
• “According to the complaint, Norton Rose unsuccessfully tried multiple times to revive the application between 2022 and 2025. Veil said that Norton Rose acted as if the application was viable the ​whole time and ​did not inform ⁠the company about any of its failures until 2024.”
• “Veil accused the firm of legal malpractice and ​breach of contract. The lawsuit said that the company ​lost licensing ⁠opportunities, market exclusivity and other business interests based on the firm’s conduct.”

“Phila. Judge Denies Second Recusal Bid in Zantac Suit for Wife’s Ties to Blank Rome” —

• “A Philadelphia judge overseeing the sprawling Zantac mass tort has declined to step aside once again over his wife’s law firm’s ties to the litigation.”
• “Keller Postman represents Roberto Jimenez and other plaintiffs, who moved in December for Roberts to recuse himself from the case over his wife’s connection to Blank Rome after she began working there as a partner in February 2025. The plaintiffs noted that Blank Rome represents one of the defendants, Apotex Corp., in a separate case in the mass tort.”
• “This week [4/21], Roberts rejected the recusal motion, noting that although his wife is a partner at Blank Rome—which represents Apotex Corp., a defendant in one of more than 550 Zantac cases—Apotex is not a defendant in the present case, eliminating any basis for recusal.”
• “He also emphasized that Keller Postman does not represent the plaintiffs in the only case involving Apotex, Hilbert v. Boehringer Ingelheim, which was filed by Anapol Weiss. Roberts explained that Blank Rome entered the Hilbert case in 2021 and that his wife did not join the firm until February 2025, which Roberts said he disclosed that same month.”
• “He concluded that any recusal request was waived because Anapol Weiss never sought recusal, and that Keller Postman waited too long to seek recusal by waiting until December to file the present motion for recusal.”
• “Even assuming Keller Postman could properly raise the issue, the judge emphasized that Pennsylvania law presumes judges are ‘honorable, fair and competent’ and capable of determining whether they can rule impartially. After a ‘conscientious determination,’ Roberts concluded he could manage the Zantac mass tort impartially and without personal bias or interest. He noted that his role in the mass tort is largely administrative and that his wife does not represent Apotex in any matter in any jurisdiction.”
• “Roberts also said that his wife has been ‘walled off from having anything to do with Apotex,’ that her ‘compensation has no direct relationship to the amount of fees or income that Blank Rome earns from Apotex,’ and that her compensation from the firm ‘is not tied to Blank Rome’s representation of Apotex.'”
• “Plaintiffs’ counsel was also involved in a separate recusal motion filed against Roberts in 2024 in a separate suit in the litigation, Jimenez v. GlaxoSmithKline. The plaintiffs argued that Roberts’ wife’s ties to her then-firm, Reed Smith, which represented Zantac manufacturer GlaxoSmithKline in litigation over the drug in other states, meant he should step aside.”
• “While they argued that his wife’s connection to GSK could create the appearance of impropriety, Roberts denied the motion after ruling that he could remain impartial in the litigation.”
• “‘The position advocated by plaintiffs has the potential to substantially and considerably impact judicial administration and case assignments throughout the commonwealth of Pennsylvania, at all judicial levels,’ Roberts held in his 2024 order.”

“Reinsurers Say Arbitrator DQ Bid Should Stay In Federal Court” —

• “Reinsurers are urging a New York federal court not to heed a Farmers unit’s request to remand its suit seeking disqualification of an arbitrator from an asbestos coverage fight, arguing the insurer wrongly framed the dispute as an attorney ethics matter.”
• “Truck Insurance Exchange’s claim that a New York attorney’s work for the insurer more than two decades ago bars him from serving as an arbitrator in the coverage fight fall squarely within the purview of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention, according to the Friday opposition brief.”
• “At one point, the reinsurers fired back at Truck’s argument that the case belongs in state court because it involves ‘important matters of New York attorney ethics.'”
• “‘Although Truck would like to cloak its complaint in the garb of attorney ethics, this case has nothing to do with New York’s administrative process for adjudicating purported ethics violations,’ the reinsurers said. Their bid to dismiss Truck’s complaint remains pending in the court.”
• “The present case involves the reinsurers’ selection of New York attorney Jonathan Rosen to serve on the arbitration panel set to consider claims that reinsurers — including certain underwriters at Lloyd’s London, Tenecom Ltd. and Dominion Insurance Co. Ltd. — wrongly withheld millions of dollars’ worth of payments for underlying asbestos injury suits against Truck’s insured.”
• “In its complaint, originally filed in state court and later removed to the Southern District of New York, Truck argues Rosen should be disqualified from the arbitration panel because he advised Truck on its contracts with the reinsurers in 2003. The complaint also brings a claim for breach of fiduciary duty against Rosen.”
• “Seeking to remand the suit to state court, Truck argues the federal court did not have jurisdiction to hear the dispute under the New York Convention.”
• “Even if it did, the case ‘cries out for abstention’ under the Burford doctrine, which directs federal courts to abstain if their adjudication would disrupt state efforts to establish coherent policy on matters of substantial public concern, Truck argues, telling the court the case implicates the ethical duties of attorneys licensed in New York.”
• “Characterizing that argument as a ‘Hail Mary,’ the reinsurers told the court Friday that applying the Burford abstention doctrine would be ‘categorically improper’ in part because Truck did not bring claims concerning the New York Rules of Professional Conduct.”
• “The reinsurers argue the case instead falls squarely within federal district court’s jurisdiction under the New York Convention because it is ‘intertwined’ with the underlying arbitration proceeding and relates to an arbitration agreement subject to that statute, thus meeting jurisdictional requirements under Sections 203 and 205 of the statute.”